BATON ROUGE- Senate Bill 514 by Sen. Murray (D-New Orleans), which redefines the Patient's Compensation Fund (PCF), was signed into law as Act 78 by the governor on June 2.

Upon its August 15, 2010 effective date, the bill will: 1) clarify the rating process utilized by the PCF; 2) de-politicize the rate making process by eliminating the rate regulation authority of the Insurance Commissioner; and 3) clarify that the PCF Oversight Board member representing insurance be an agent licensed in Louisiana who is familiar with property and casualty insurance.

The insurance commissioner proposed legislation that would have required the PCF to raise another $300 million to have 100 percent of total liabilities on hand. This proposal, which died in committee, would have necessitated raising rates significantly on physicians and hospitals, and could have put the Medical Malpractice Act and its protections in serious jeopardy. SB 514 will allow the PCF oversight board more freedom to adjust surcharge rates, which had been going up on a yearly basis.

It is hoped that a surcharge reduction will be feasible for 2011 rates for most healthcare providers. Also, by removing interference from the Commissioner of Insurance, the PCF can continue to act as a well-financed, revolving fund and will not be forced to adhere to insurance principles.

In addition, HB 1286 by Rep. Ligi (R-Metairie) to take the PCF "off budget," meaning it will no longer be considered part of the state's budget, was reported favorably without objection by the Senate Committee on Judiciary A. It now goes to the floor of the Senate for final passage. Going "off budget" will lessen the restrictions on the PCF budget and allow it to operate more like a business.